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The aggregate shortfall was €10.9 billion from the sample of 194 EU banks from 17 of the bloc’s 28 member states, a fraction  of the total amount held in LCR buffers.
The aggregate shortfall was €10.9 billion from the sample of 194 EU banks from 17 of the bloc’s 28 member states, a fraction  of the total amount held in LCR buffers.

EU Banks Comply With New Liquidity Rules

Banks should have enough cash on hand to meet any immediate demands without eating into their core capital or having to draw on taxpayer support

EU Banks Comply With New Liquidity Rules

The European Union banking sector has complied with new liquidity rules ahead of a 2018 deadline and no extra time is needed to plug a €11 billion shortfall at a few banks, the bloc’s watchdog said on Wednesday.
The new rules, known as the liquidity coverage ratio, require banks to hold enough cash and top quality securities to last a 30-day outflow of funds in rocky markets, Reuters reported.
Drawing on the lessons of the 2007-09 financial crisis, the aim is for banks to have enough cash on hand to meet any immediate demands without eating into their core capital or having to draw on taxpayer support.
The European Banking Authority said that at the end of December 2015, the EU bank sector’s average LCR was 134%, meaning the sector overall was well above requirements.
The aggregate shortfall was €10.9 billion from the sample of 194 EU banks from 17 of the bloc’s 28 member states, a fraction of the total amount held in LCR buffers. The watchdog did not name any bank by result, but it did say that 90% of the banks sampled comply in full, with three not meeting the current minimum LCR requirement of 70%.
And most lenders with an LCR still below 100% were making full use of the existing phase-in period rather than not being able to fully comply ahead of the January 2018 deadline.
The current shortfall is driven by automotive and consumer credit banks, the EBA said, adding there was no strong evidence to suggest it should recommend a one-year extension to January 2019 for phasing in the LCR.

  Euro Banks Hit
Struggles continue in the Italian banking sector, where at least €52 billion ($54 billion) is needed to clean up balance sheets, according to data compiled by Bloomberg. This is far above the scale of the rescue package proposed this week by the government, and comes amid concerns that Banca Monte dei Paschi di Siena SpA will fail in its efforts to attract €5 billion of private-sector funds.
Shares in the embattled lender lost 18.2% in trading Wednesday morning. Meanwhile, Rome received parliamentary approval for a €20 billion debt-boosting plan for that country’s troubled financial sector.
Spanish lenders’ shares were also hit—falling as much as 10%—after Europe’s top court ruled against the institutions on a mortgage interest-payments case that means customers may be entitled to billions of euros in compensation.
Spanish banks face having to repay customers more than €4 billion ($4.2 billion) after the European Court of Justice unexpectedly overturned a Spanish court ruling capping liabilities relating to a disputed mortgage clause.
Banks will now have to compensate customers for what they lost on the mortgages before May 2013, when Spain’s Supreme Court declared them invalid if they had not been presented clearly. The home loans had an interest rate that could not fall below a benchmark, meaning customers lost out on the lower mortgage cost when rates dropped beneath this level.
The ruling knocked shares in Banco Sabadell, Banco Popular, Caixabank and Liberbank—the banks most exposed to these “floor clauses”, which a Bank of Spain source said could have an additional impact of “slightly more than” €4 billion on the country’s banks.

 Shares
Banking stocks lead European indices mildly lower Wednesday morning in thin trading despite US markets closing at record highs yesterday.
The Spanish IBEX was the biggest loser as the EU’s top court ruled against Spanish lenders over mortgage interest repayments.
Banco Popular, Caixabank, Banco Sabadell, and Santander were all hit as the banks may have to repay billions of euros to mortgage customers.
European banks remain in the news as the Swiss Competition Commission announced that it had levied fines of around CHF100 million to those lenders involved in rate rigging. Deutsche Bank, SocGen, RBS, and Barclays were reported to have reached an “amicable settlement” with the regulator.

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